Spain, Portugal Bond Yields Fall To Multi-Year Lows

By Michael Aneiro

Peripheral euro-zone sovereign debt is having a strong start to 2014, with both Spanish and Portuguese bond yields falling to multi-year lows as the euro area reported a trade surplus in November. Eshe Nelson and David Goodman report today for Bloomberg:

Spain’s 10-year yields fell toward the lowest level since 2006 and Portuguese and Greek securities both rallied amid optimism the region’s sovereign debt crisis is abating. Portugal’s 10-year yield dropped to the least since 2010 as the nation sold 1.01 billion euros ($1.36 billion) of one-year bills at the lowest rate at an auction since 2009. Germany’s benchmark 10-year bunds dropped after the country sold five-year notes….

Spanish 10-year yields dropped five basis points, or 0.05 percentage point, to 3.77 percent at 3:10 p.m. London time after falling to 3.67 percent on Jan. 9, the lowest since September 2006. The 4.4 percent bond due in October 2023 rose 0.405, or 4.05 euros per 1,000-euro face amount, to 105.09. The yield has tumbled 39 basis points this year.

The story notes that peripheral European debt was a strong performer last year, with Spain’s bonds returning 12% in the 12 months through yesterday while Italy’s gained 6.8%. German bonds, meanwhile, earned less than 0.1%.